FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[Williams406]

Wiggins linking to the Herbalife article seems perfectly apt: multi-level marketing reps don't make the money they think they are going to make, and neither have GSE investors the past couple of days.

 

My GSE position is full...for now.

[Luke 532]

Bloodbath! Congrats to those that don't yet have a full position and can buy more.

[DRValue]

Bloodbath! Congrats to those that don't yet have a full position and can buy more.

 

My position could only be described as full yet I feel as if I'm about to somehow end up with more prefs...

 

This bleed out could last till at least the capital rule. So I'll wait to pull the trigger.

[muscleman]

I'd buy more but I'm already maxed. I suspect that's a similar situation for many commenters here.

 

+2

 

 

I have an exactly opposite view than most of you here. I had a tight stop and was stopped out of my big 20% position last Thursday and since then I've been flat. I was gonna post this yesterday but was too busy.

I think a major top is right here. $14 is the key resistance for FMCKJ. The market reaction has never been worse. A positive court ruling only caused a false break out. Then this Monday's 20bn capital retaining news only caused a big volume down day, followed by another big volume down day yesterday. If you look at the daily chart since the positive court ruling and count how many down days you get vs the up days, and the volume on the only 3 up days, you'll see how little buying there was.

This is the one of the few classic topping actions.

I don't see any reason to continue holding this stock. It will either go flat or go down.

 

This will be my last TA post here. I don't like being taunted over and over by lots of you. Thanks!

 

 

[SnarkyPuppy]

I'd buy more but I'm already maxed. I suspect that's a similar situation for many commenters here.

 

+2

 

 

I have an exactly opposite view than most of you here. I had a tight stop and was stopped out of my big 20% position last Thursday and since then I've been flat. I was gonna post this yesterday but was too busy.

I think a major top is right here. $14 is the key resistance for FMCKJ. The market reaction has never been worse. A positive court ruling only caused a false break out. Then this Monday's 20bn capital retaining news only caused a big volume down day, followed by another big volume down day yesterday. If you look at the daily chart since the positive court ruling and count how many down days you get vs the up days, and the volume on the only 3 up days, you'll see how little buying there was.

This is the one of the few classic topping actions.

I don't see any reason to continue holding this stock. It will either go flat or go down.

 

This will be my last TA post here. I don't like being taunted over and over by lots of you. Thanks!

 

This is certainly one way of viewing a court victory deeming NWS illegal and an agreement to suspend the NWS.... 

[orthopa]

I'd buy more but I'm already maxed. I suspect that's a similar situation for many commenters here.

 

+2

 

 

I have an exactly opposite view than most of you here. I had a tight stop and was stopped out of my big 20% position last Thursday and since then I've been flat. I was gonna post this yesterday but was too busy.

I think a major top is right here. $14 is the key resistance for FMCKJ. The market reaction has never been worse. A positive court ruling only caused a false break out. Then this Monday's 20bn capital retaining news only caused a big volume down day, followed by another big volume down day yesterday. If you look at the daily chart since the positive court ruling and count how many down days you get vs the up days, and the volume on the only 3 up days, you'll see how little buying there was.

This is the one of the few classic topping actions.

I don't see any reason to continue holding this stock. It will either go flat or go down.

 

This will be my last TA post here. I don't like being taunted over and over by lots of you. Thanks!

 

Bye Felicia!

[buffetteer1984]

anybody that has bought on pullbacks over time have done relatively well.  This isn't a short term trade people should try to game based on charts just see MM buy high and sell low strategy (the stock is up 100% for the year!). 

 

I'd buy more but I'm already maxed. I suspect that's a similar situation for many commenters here.

 

+2

 

 

I have an exactly opposite view than most of you here. I had a tight stop and was stopped out of my big 20% position last Thursday and since then I've been flat. I was gonna post this yesterday but was too busy.

I think a major top is right here. $14 is the key resistance for FMCKJ. The market reaction has never been worse. A positive court ruling only caused a false break out. Then this Monday's 20bn capital retaining news only caused a big volume down day, followed by another big volume down day yesterday. If you look at the daily chart since the positive court ruling and count how many down days you get vs the up days, and the volume on the only 3 up days, you'll see how little buying there was.

This is the one of the few classic topping actions.

I don't see any reason to continue holding this stock. It will either go flat or go down.

 

This will be my last TA post here. I don't like being taunted over and over by lots of you. Thanks!

 

Bye Felicia!

[Guest cherzeca]

if you think:

1. a GSE public offering will occur in 12 months (ie before 1/20/21)

2. the juniors will be offered an exchange opportunity in connection with 1.

3. while the market will have gyrations and the economy will be buffeted, the GSEs will remain profitable and be able to build its capital cushion, in preparation for 1.

4. the legal landscape will remain stable or improve

 

then <50% of par (fnmas) seems to be an enticing price.  you can go through a probability scenario and develop a very nice discounted IRR...and if you dont get there because of your risk discounting, then you should not be in name

[Cox022]

https://www.valuewalk.com/2019/10/fannie-mae-freddie-mac-preferred-shares/

 

I suppose it was a Bove note that came out 3ish days ago that may explain the price drops.  I dont have the actual report. 

 

I think the risk of a footprint reduction is minimized because I don't think Calabria or anyone else in DC has the guts to do anything to make it harder for Americans to buy a home.

 

As it relates to delays, any long term GSE investor knows that a slower than expected timeline is a risk.  Bove does a good job embodying a short term investor; by the time the skies clear and he reacts by recommending the securities again (which he already admits are really attractive over the long term...go figure) they will be less attractively priced than they are today.

[Wiggins]

I agree, although I think there is more to this story that is significant. If you look at the last ValueWalk article citing Bove that I previously linked to, and also if you look at this one that you linked to, both are highly misleading and/or sloppy to the point of being manipulative, and in a similar way. This one was originally published as "premium" content immediately BEFORE the letter agreement was released on September 30th, and then released for free to the public immediately after that letter agreement. This is significant because Bove opines that the agreement to allow the GSEs to retain capital won't happen until the end of the year. Now, it's bad enough to report this a day or two before the end of the month, rather than wait to see whether they release it by the end of the month as they said they would. But to publish it AFTER the letter is released -and the letter shoots down your thesis- is ridiculous. He is basing his valuation on an event which has already gone the other way from what he was predicting. It is hard to know whether it is ValueWalk's fault or just that Bove is an idiot. But, one of them is extremely sloppy, idiotic, or again, purposefully misleading in order to manipulate the prices of the securities. I will add that ValueWalk brags on their website that their stories "move markets."

 

The previous article I linked to from ValueWalk did the same sort of thing: it based a mediocre valuation of the securities on the en banc decision not having been made, AFTER the en banc decision had come out as favorable to investors.

 

I was going to post this blurb above, but cherzeca had responded to my last post simply that "Bove is an idiot." And I agree with cherzeca on that so didn't want to bother people here with a link to poor content. But @cox022 since you noticed it I thought I would go ahead and mention this. I think it IS significant with respect to the securities going down. I also think it's significant because some commenters here seem to assign significance to selloffs, perhaps on a technical basis, and they trade accordingly. So if there is a bogus reason for the selloff that is identifiable then that should be taken into consideration.

 

I have no idea whether ValueWalk is widely read and whether it is the culprit for the price action. I think the other (equally misinformed) reason for the selloff may be the ubiquitous hysterical comments that the liquidation preference is increasing and this diminishes or negates the significance of the letter agreement. The only way to draw this conclusion is to not have listened to Calabria or Mnuchin who have said for months that the liquidation preference will increase and that this is a temporary fix until they negotiate a definitive agreement on the SPS.

 

My own take on all this is that there is a lot of bogus information out there and one can take advantage of the herd-like mentality of the markets. I have seen this as a buying opportunity and think the thesis is stronger than ever.

 

https://www.valuewalk.com/2019/10/fannie-mae-freddie-mac-preferred-shares/

 

I suppose it was a Bove note that came out 3ish days ago that may explain the price drops.  I dont have the actual report. 

 

I think the risk of a footprint reduction is minimized because I don't think Calabria or anyone else in DC has the guts to do anything to make it harder for Americans to buy a home.

 

As it relates to delays, any long term GSE investor knows that a slower than expected timeline is a risk.  Bove does a good job embodying a short term investor; by the time the skies clear and he reacts by recommending the securities again (which he already admits are really attractive over the long term...go figure) they will be less attractively priced than they are today.

[Guest cherzeca]

GSEs are a strong large holding for a few institutional investors and a weak smallish holding for many institutional investors.  when the market had indigestion from the manufacturing report, many of the latter will shed risk, and the GSE holding would be a natural place to do that.  I dont think you have to think harder than that for the recent downdraft.

[james22]

In a scenario that might sound familiar to readers who remember the run-up to the financial crisis, new research has found that Fannie Mae and Freddie Mac have been buying mortgages on homes in disaster-prone areas and packaging them up into securities, without charging a premium that accurately reflects long-term disaster risks.

 

https://www.zerohedge.com/markets/sound-familiar-banks-are-saddling-fannie-freddie-risky-mortgages-study-finds

 

Investors might fear the conditions that come with an explicit backstop?

[Cox022]

Thanks for the comments, Wiggins.  Seems like poor form, at a minimum, for VW to be so vague.

 

Separately, I've read that Calabria, Mnuchin, and Carson are expected to testify in front of the House Financial Services Committee towards the end of this month.  I don't think that's been nailed down quite yet so keep an eye out for that.

[Guest cherzeca]

"Separately, I've read that Calabria, Mnuchin, and Carson are expected to testify in front of the House Financial Services Committee towards the end of this month.  I don't think that's been nailed down quite yet so keep an eye out for that."

 

yes, advance ordering of popcorn in order

[Luke 532]

Separately, I've read that Calabria, Mnuchin, and Carson are expected to testify in front of the House Financial Services Committee towards the end of this month.  I don't think that's been nailed down quite yet so keep an eye out for that.

 

Maybe October 22nd. Attached.

[Guest cherzeca]

IMF has one of its stupid rumor blurbs out today, that Buffett may be interested in the capital raise for GSEs.

 

usually WEB likes to go in with a convertible preferred, offering a nice current dividend and a favorable conversion price into common.  in other words, senior, current paying and huge upside.  I dont see that as being doable with the GSEs, even if all of the juniors exchange into common (and of course the seniors are nuked). possible, but the conv. pref that WEB would get would have to be noncumulative in order to count as capital, and WEB has said that doesn't work for him generally.

 

the interesting idea, though, would be if treasury would offer to sell WEB a major hunk of its warrants at a favorable price in consideration for WEB also investing in a large hunk of newly issued common.  this might work for WEB's rapacious mind.  treasury likely will want some return on its warrant position but probably would love to have its warrants serve as an inducement for a private placement of common.

[Luke 532]

Financial Advisor, attached...

FHFA-Statement-of-Work-10042019.pdf

[asterisk]

Financial Advisor, attached...

 

Thank you. What is the source for this?

[Luke 532]

ACG's take...

 

 

Hiring an FA gives @FHFA and Administration non-political backing to act on recommendations from @USTreasury report. https://t.co/oB2sJsyi3A #GSEs

[Luke 532]

Interesting American Banker article out today by Hannah Lang: https://www.americanbanker.com/news/fannie-and-freddie-get-to-keep-their-earnings-now-what

[Luke 532]

Financial Advisor, attached...

 

Thank you. What is the source for this?

 

Bloomberg

[beaufort]

If FHFA is hiring a financial advisor, the capital rule is likely ready. 

[Guest cherzeca]

I’ve been waiting for this for several months

[Guest cherzeca]

If FHFA is hiring a financial advisor, the capital rule is likely ready.

 

I agree (though when officially released is another matter). If you are going to give an investment bank a mandate it is good to know what the mandate is

[Midas79]

Here's a link I got on Twitter.

https://www.fbo.gov/index.php?s=opportunity&mode=form&id=0c268c2f435189a7d727ecbd5c87a8a8&tab=core&_cview=0

 

I just can't shake the feeling that this is rather bad news. The timeline has been slowed considerably. Phase I, which is basically building the roadmap, will take 12-18 months and Phase II, implementing it, will take 1-4 years. That's far, far slower than I thought this would go. Too many things can go wrong the longer this takes.

 

I had assumed that the amendment and capital rule would be done by March at the latest, setting the stage for a summer IPO as Mnuchin said that he wanted. Now it looks like the IPO might even be pushed beyond Q1 2021, which introduces the election risk that I thought this administration was trying to avoid.